Russia: Analysis Of Putin's Meeting With Tycoons

July 07, 2000 00:00 GMT

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Russia: Analysis Of Putin's Meeting With Tycoons

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By Donald Jensen

Russian President Vladimir Putin and 18 leading businessmen, or 'oligarchs,' hold an unprecedented discussion later today. RFE/RL's Donald Jensen reports the meeting may help Putin reassert the role of the state but is unlikely to solve the root of the problem: the interconnection of money and power in Russian political life.

Prague, 28 July 2000 (RFE/RL) -- In recent weeks Vladimir Putin has seemingly begun to carry out his election promise to reduce the influence of Russia's notorious business oligarchs, who grew rich during the Yeltsin era due to their close ties to government officials and easy access to public funds.

So far, however, his campaign has largely settled scores against the Kremlin's political and business opponents, while leaving magnates close to him untouched.

Putin's summit today (28 July) with the leading oligarchs on may be a first step toward creation of a fairer economic playing field or toward reasserting the role of the state. It is unlikely, however, to address a more fundamental problem, the interconnection between property and political power. Putin's rhetoric to the contrary, he does not yet have the power or the intention to break the link between the two.

Putin has moved against several leading business empires, including Media-MOST, Lukoil, and Norilsk Nickel, whose owners have been accused of a variety of crimes ranging from embezzlement to tax evasion.

Media-MOST owner Vladimir Gusinsky has long been critical of the government, especially the war in Chechnya, and last year supported the Fatherland political movement of Yevgeni Primakov and Yuri Luzhkov, at the time Putin rivals. Lukoil's Vagit Alekperov is close to powerful Tatarstan Governor Mintimer Shaimiev, and also backed Fatherland, while Norilsk Nickel owner Vladimir Potanin has never been close to the Kremlin.

By contrast, Kremlin "bankers" Roman Abramovich and Aleksandr Mamut, who financed Putin's election campaign, have been spared. In fact, several of Putin's steps so far have benefited their business interests.

Accusations of tax evasion against Lukoil, for example, may have been intended in part to knock it out of the running for the state-controlled oil-company ONAKO, Russia's 12th largest oil producer, whose majority stake went on sale 21 July.

Abramovich's Sibneft company, as well as Transneft, controlled by Semyon Vainshtok, another pro-Putin oligarch, are said to be considering strong bids.

For the all hoopla in recent days surrounding Boris Berezovsky's public break with the president and intention to create an opposition party, Berezovsky, another backer of Putin's rise to power, recently installed his daughter on the board of the state television network ORT, which remains in his control. The state-owned Vneshtorgbank recently indicated it may loan Berezovsky $85 million to operate the channel.

Putin's strong-arm tactics have relied on the MVD, FSB (the intelligence service), the tax police, and the procurator rather than the courts -- to bring the oligarchs to heel. The "Family," the Kremlin faction that includes former Yeltsin speechwriter Valentin Yumashev, Yeltsin's daughter Tatyana Dyachenko, and Presidential Administration chief Aleksandr Voloshin, as well as Mamut and Abramovich, reportedly favors maintaining a few large oligarchic empires who are independent, but close to the Kremlin.

A second faction, centered in the FSB and the newly empowered Security Council, prefers to remove the oligarchs entirely and transform Russia's large businesses into state companies headed by proteges of the president. Putin appears not to have firmly committed to either option so far.

Even if the most notorious oligarchs were removed, it would do little to untangle the interconnection of business and politics that is a fundamental aspect of Russian politics. Alliances between governors and regional oligarchs sometimes against the intrusions of better known magnates from Moscow are common. At the federal level, ministries routinely engage in commercial activities. By most measures Voloshin's Presidential Administration qualifies as an oligarch in his own right.

Perhaps more significantly for Putin, the security services on which he has relied are as motivated by money as they are by serving the public interest. Many large firms employ former FSB intelligence officers, and ties undoubtedly remain strong between the latter and Lubyanka. Press reports say Interior Minister Vladimir Rushailo, one of Russia's major law enforcement officers, was extensively involved in entrepreneurial activity when he headed Moscow's organized crime directorate in the early 1990s. Among his alleged activities was the provision of protection to major Moscow firms in exchange for corporate contributions. In the regions, governors and the firms that support them often supplement the federal salaries of law enforcement officials out of their own pocket, thereby eroding their loyalties to Moscow.

Among the 18 business officials invited to attend Putin's meeting with business leaders today are Alekperov, Gazprom chief Rem Vyakhirev, and Yurkos head Mikhail Khororkhovsky, as well as an executive from the telecommunication company Vympelcom. Berezovsky and Gusinsky reportedly have not been invited. Union of Rightist Forces faction leader Boris Nemtsov, who along with Voloshin pressed for the meeting, has predicted that business leaders will propose a three-point declaration in which the Kremlin will agree to stop investigations into past privatization deals in return for a pledge by the oligarchs to play by the rules. The government, in turn, would get rid of corrupt bureaucrats, "beginning with the Procurator-General's office." Kremlin sources have stated that it is unlikely that any agreement will be signed.